In 2011, MIT and Russian institutions including the Skolkovo Foundation launched a multi-year collaboration to facilitate the conception of the Skolkovo Institute of Science and Technology—dubbed Skoltech— a private graduate research university in a suburb of Moscow that was designed to stimulate the Russian entrepreneurial ecosystem and address a number of pressing global issues.
MIT has been responsible for helping to develop and coordinate Skoltech’s education, research, and entrepreneurship programs. The mission? To fuel educational, scholarly and economic impact in the Russian Federation, and furthermore, to intensify Russian impact on the global innovation community. And despite immense efforts from MIT and other institutions and companies, the attempt to establish a Russian version of Kendall Square or Boston’s Innovation District has been stunted by ongoing obstacles, due largely to Vladimir Putin’s return to power.
In the early stages, the initiative appeared promising. After the first full academic year of the Skolkovo Institute of Science and Technology ended last June, nearly half of the 80 students were already involved in a startup. And the faculty members involved had grown from a handful to 50. The new focus would be to build out the $2.7 billion Skolkovo Innovation Center, which would become Skoltech’s permanent campus and a hub that would hopefully give Russia’s tech industry a boost. But after anti-corruption agents raided Skolkovo in April 2013, and the incubator was forced to cut costs, the future of the innovation center began to look increasingly grim.
To understand where these challenges stem from, we must step back to 2009, when then-President Dmitry Medvedev first unveiled the ambitious Skolkovo endeavor. What he envisioned could be described as Russia’s Kendall Square, and the concept inspired nearly half a billion dollars in investments from companies like Microsoft, Intel, Samsung Electronics and Cisco Systems.
Skolkovo grew from 332 resident companies in 2011 to 793 a year later. By 2013, there were more than a thousand startups housed there. Then, the foreign capital began pouring in.
In his 4,000-word treatise “Go Russia!”, Medvedev outlined a slew of reforms that would leverage technology in the name of modernizing and empowering Russia. He asserted that these initiatives could, ultimately, reverse some of the devastating negative effects from the global downturn, like rising unemployment rates and dependence on commodities exports. Inarguably, the aspect of Go! Russia that garnered the most excitement was the focus on stimulating IT innovation—and just a few months later, it was announced that a $4 billion innovation district was to be constructed on a 600-acre plot in Skolkovo. This project would essentially act as an incubator for Russian startups, providing office space, educational opportunities and grants for thousands of in-resident technologists and researchers.
It didn’t take long for the idea to take off: The Medvedev government negotiated a partnership between Skolkovo and MIT, garnered financial support from major players in Silicon Valley, and startups came to the campus in droves. In fact, according to Foreign Policy, Skolkovo grew from 332 resident companies in 2011 to 793 a year later. By 2013, there were more than a thousand startups housed there. Then, the foreign capital began pouring in.
A hub loses its champion
But this rapid early success seems to have been short-lived. In March 2012, Putin—then Prime Minister—won the Russian presidential election in the first round. December of that year, Putin vetoed a law that had freed Skolkovo of the obligation to obtain state planning permits. In April 2013, several of the Skolkovo Innovation Center project’s figureheads were accused of embezzling funds. And shortly thereafter, the government reversed its preferential treatment for Skolkovo, pushing the incubator farther down its priority list and ordering that costs be slashed by 20 to 40 percent.
So what happened to the entrepreneurs who were planning to grow their businesses in Skolkovo?
Anton Gladkoborodov, co-founder of the video-sharing platform Coub—one of the more successful Moscow tech companies— told Foreign Policy that he knew of five to eight companies that had either already fled the motherland or were plotting their escape.
“If they open the borders and let people have visas, everyone will leave,” he said.
Nina Zavrieva, co-founder of Moscow startup Channelkit, a digital management tool that resembles Pinterest, told FP she was aware of a slew of startups that had picked up and moved to New York, San Francisco and other U.S. cities, emphasizing that “people are proactively looking for opportunities outside of Russia.”
Without Medvedev, a self-described tech nerd, to champion the project, did a Skolkovo innovation center have a fighting chance? In Go Russia! the former president discussed introducing the necessary financial and legislative conditions for IT companies to flourish, acknowledging that an open exchange of ideas and certain democratic freedoms and open exchange of ideas were crucial to fueling innovation. But with Putin — who has continued to place ever-tightening limitations on Internet freedoms — back in power, the potential for anything remotely close to a Silicon Valley in Russia is probably a pipe dream. An entrepreneur who launches a successful venture there faces the risk that it will all be snatched away from them.
Professor Bruce Tidor, MIT’s faculty lead on the institution’s initiative, is still optimistic about the potential for Skoltech specifically, but noticeably declined to comment on the seemingly flailing “innovation city.”
Establishing Skolkovo as a thriving innovation hub largely depends on ensuring that entrepreneurs have a reason to stay.
“Skoltech is but one part of the much larger Skolkovo innovation project,” he said in an email. “Skoltech is designed to build intellectual relationships in a transparent environment, centering on open, fundamental, publishable research, which will contribute positively to Russian, and world, society. MIT is excited about this collaboration, which is off to a good start and attracting excellent students and faculty. The work ahead is as worthy as it is difficult.”
It goes without saying that recreating Kendall Square would be difficult to pull off anywhere, let alone in Russia. Establishing Skolkovo as a thriving innovation hub largely depends on ensuring that entrepreneurs have a reason to stay.
Of course, there are still benefits to remaining in Russia. Channelkit’s Zavrieva told Foreign Policy that it’s now significantly cheaper to live and develop a tech company there than in other locations—thanks to the devaluation of the ruble, dollar investments are stretching significantly farther.
But there’s increasing doubt as to whether Russia is the right environment for such a massive tech innovation development.
image of Skolkovo Innovation Center via Shutterstock.